A company is preparing its cash budget. Its cash balance on January 1 is $290,000, and it has a minimum cash requirement of $340,000. The following data have been provided:
-Southern Company is preparing a cash budget for April. The company has $12,000 cash at the beginning of April and anticipates $30,000 in cash receipts and $34,500 in cash disbursements during April. Southern Company has an agreement with its bank to maintain a minimum cash balance of $10,000. To maintain the required balance during April, the company must

Question

A company is preparing its cash budget. Its cash balance on January 1 is $290,000, and it has a minimum cash requirement of $340,000. The following data have been provided:  ​
-Southern Company is preparing a cash budget for April. The company has $12,000 cash at the beginning of April and anticipates $30,000 in cash receipts and $34,500 in cash disbursements during April. Southern Company has an agreement with its bank to maintain a minimum cash balance of $10,000. To maintain the required balance during April, the company must

Quizplus · Accepted Answer

The company starts with $12,000, expects to receive $30,000, and anticipates spending $34,500. This results in a final cash balance of $12,000 + $30,000 - $34,500 = $7,500. To maintain a minimum balance of $10,000, the company must borrow $10,000 - $7,500 = $2,500.

A Company Is Preparing Its Cash Budget